WASHINGTON -- The Clinton administration is pressing ahead with a plan to transform background investigations of many government employees into a profit-making business run by a newly created private company, despite protests from some members of Congress, Cabinet officials, and investigators worried about confidentiality and security lapses.

Under the plan, which has been in the works for a year and a half and will take effect at the end of this week, about 40 percent of security and other background checks on government employees and job applicants will be taken over by an employee-owned, profit-seeking company. The employee-owners will be the 700 workers in the Office of Personnel Management's Office of Federal Investigations, which now does the checks.

The office does not conduct investigations for White House or Cabinet-level appointees, which are handled by the FBI, and does only limited work for the Defense Department, which has its own investigative service.

Even so, critics worry that the plan could leave many government agencies relying on an untested new company that may not have full access to law enforcement records.

Moreover, the critics said, it could place sensitive records about government employees and job applicants in the hands of a business venture, raising concerns about the privacy of personal information when the White House itself has been found lax, at a minimum, in its handling of confidential background files. The administration has been besieged in the past several weeks with questions about how it came to have FBI files on prominent Republicans, among other people.

"Even within the federal government we've seen an abuse of sensitive files, as the current FBI case illustrates," said Sen. Paul Simon of Illinois, a Democrat who raised objections to the plan last year. "Turn it over to private investigators and the invitation to abuse is going to be very real." The Office of Federal Investigations does the bulk of the background checks for the Energy Department, the Treasury Department, the Immigration and Naturalization Service, and other departments and agencies that need to investigate new employees and update security clearances for current employees. Its work includes checking criminal and other legal records, reviewing employment and academic histories and interviewing associates or neighbors of some higher-level employees.

Simon and Rep. Thomas M. Davis III, a Virginia Republican, have introduced legislation to delay the plan for two years to provide more time to study its implications.

But they acknowledged that the bill has almost no chance of passing before the plan takes effect.